Vodafone Idea Limited — Q4 FY25 earnings call

Call held 2 Jun 2025

Management summary

Vodafone Idea reported a strong Q4 FY25 with revenue growth and record capex, significantly expanding its 4G coverage and initiating 5G rollout in key cities. The company successfully raised substantial equity, improving its financial health and credit ratings. However, challenges persist with low ARPU and the critical need for further tariff hikes, while ongoing debt funding discussions are contingent on clarity regarding the large AGR dues.

Highlights

  • Revenue for Q4 FY25 was ₹11,010 crores, up 3.8% YoY, marking the highest daily average revenue in 5 years.

  • The company recorded its highest quarterly capex since merger at ₹4,280 crores in Q4 FY25, contributing to a total FY25 capex of ₹9,620 crores.

  • 4G population coverage expanded by 73 million, reaching ~83%, with 4G data capacity growing by ~31% and speeds improving by 28%.

  • Initial 5G services have been launched in Mumbai, Delhi, Chandigarh, and Patna, with good uptake and positive feedback.

  • Equity of ~₹614 billion was raised in FY25, including FPO, preferential issues, and government conversion, leading to credit rating upgrades and reduced bank debt from ₹4,040 crores to ₹2,330 crores.

Concerns

  • ARPU in India remains among the lowest globally, and the industry's ROCE continues to be below the cost of capital, necessitating further tariff increases.

  • The settlement asset from Vodafone Group has been postponed to September 2025, pending discussions and payment of AGR dues.

  • Debt funding discussions are ongoing and require further clarity from banks regarding the Adjusted Gross Revenue (AGR) dues, which stand at ₹76,000 crores including accrued interest.

Key financials

2 periods

Headline

  • Revenue
    ₹11,010 Cr
    YoY +3.8%
  • EBITDA (ex-IndAS116)
    ₹2,320 Cr
  • Reported EBITDA (incl-IndAS116)
    ₹4,660 Cr
  • Cash and Bank Balance
    ₹9,930 Cr
  • Bank Debt
    ₹2,330 Cr
  • 4G Subscribers
    126.4 Mn
  • Data Traffic Growth
    5.2%
  • ARPU (ex-M2M) Growth
    1%

FY25

  • PAT Loss
    ₹27,380 Cr

What they filed

Q1 FY27: revenue up 5.8%, net profit up 44.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue10,841 11,024 10,880 10,906 11,068 +2%11,214 +2%11,197 +3%11,539 +6%
EBITDA4,351 4,553 4,420 4,355 4,457 +2%4,602 +1%4,653 +5%4,808 +10%
Net profit-7,210 -6,493 -7,268 -6,633 -5,584 +23%-5,324 +18%52,022 +816%-3,712 +44%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹4,280 Cr this quarter · ₹9,620 Cr (FY25) planned
    • 4G population coverage expansion
    • 5G network rollout
    • Broadband tower additions
    • Enhancing overall coverage and indoor connectivity
    For Q4FY25, we invested Rs. 42.8 billion highest quarterly capex since merger. This brings the total Capex for FY25 to Rs. 96.2 billion.
  • Debt Debt disclosed
    • Repayment Debt from banks reduced from Rs. 40.4 billion in Mar'24 to Rs. 23.3 billion in Mar'25. ₹1,710 Cr
    The debt from banks reduced from Rs. 40.4 billion in Mar'24 to Rs. 23.3 billion in Mar'25. The cash and bank balance as of March 31, 2025 stands at Rs. 99.3 billion.
  • Liquidity Cash ₹9,930 Cr Cash and bank balance as of March 31, 2025, providing liquidity for operations.
    The cash and bank balance as of March 31, 2025 stands at Rs. 99.3 billion.

Guidance & targets

Coverage

  • 4G population coverage Coverage · future · Medium confidence ~90%

    From ~83% today

    I must remind you that this is just the start of our larger investment cycle. As mentioned earlier, we plan to take 4G tower count to approx. 215-220,000 i.e. an increase of over 45,000 4G towers vs Mar'24, which will improve our 4G population coverage to ~90%.

    — Akshaya Moondra

Network Infrastructure

  • 4G tower count Network Infrastructure · future · Medium confidence 215,000-220,000
    As mentioned earlier, we plan to take 4G tower count to approx. 215-220,000 i.e. an increase of over 45,000 4G towers vs Mar'24, which will improve our 4G population coverage to ~90%.

    — Akshaya Moondra

  • Total site count Network Infrastructure · future · Medium confidence 220,000 sites
    So ultimately, our target is to get to about 220,000 sites. In terms of that being dependent on bank funding, as I said, with our current capex in progress, we should get to 84% population coverage.

    — Akshaya Moondra

5G Rollout

  • 5G services availability 5G Rollout · August 2025 · High confidence all 17 circles with 5G spectrum
    Our expansion efforts are underway to offer 5G services in all the 17 circles where we have 5G spectrum by August 2025.

    — Akshaya Moondra

Capex

  • Capex under implementation Capex · current and next quarter · High confidence ₹5,000-6,000 crores
    Currently, we have got capex under implementation in the ballpark of about INR5,000 crores to INR6,000 crores. A large part of it would be implemented in the current quarter and some of it may spill over to the next quarter.

    — Akshaya Moondra

  • Capex for current and coming quarter Capex · current and coming quarter · High confidence ₹6,000 crores
    But at least for this quarter and coming quarter, we are on track for kind of incurring a capex of roughly around INR6,000 crores.

    — Akshaya Moondra

What to watch in Q1 FY26

Debt Funding Progress

next quarter
Current Discussions ongoing, banks need more clarity on AGR
Target Securing bank funding for network expansion

Why it matters

Crucial for executing the long-term network expansion plan and achieving coverage targets.

With our current planned capex, the 4G population coverage will increase to ~84% and 5G will be launched in all 17 circles, where we have 5G spectrum. We remain actively engaged with our lenders for tying up debt funding towards the execution of our long term network expansion plan.

Risks & concerns

  • Low ARPU and need for tariff hikes

    high

    India has one of the lowest ARPUs globally, making it challenging to sustain investment; further tariff increases are essential.

    Management acknowledged

  • Dependency of debt funding on AGR clarity

    high

    Banks require more clarity on AGR dues before committing to debt funding for network expansion.

    Management acknowledged

  • Settlement asset recovery linked to AGR dues

    medium

    The receipt of the settlement asset from Vodafone Group is dependent on the company's payment of AGR dues, and discussions are ongoing.

    Management acknowledged

Q&A highlights

6 direct
AGR Issue and Government Relief Direct
Yes, our view is that the government can do. And in fact, just to put things in perspective, even when the reforms package was announced in 2021, there was some PIL, which was filed in the Supreme Court. And that time the Supreme Court in their final order, they had stated to the effect that this is a policy matter, which is within the purview of the government, and they would not interfere in it.

Clarifies management's belief that the government has the authority to provide relief on AGR dues, which is crucial for the company's financial stability and future funding.

Asked by Saurabh Handa

Debt Funding and AGR Clarity Partial
Generally, our discussions, part discussions with the banks showed that they needed some more clarity on AGR. Conversion, of course, has been a big step forward. So, I would say that the banks would want some clarity on the AGR dues. While that is happening, it is not preventing the discussions to go forward. Discussions are still continuing.

Highlights that bank funding is still contingent on further clarity regarding AGR dues, indicating a potential hurdle for the company's long-term network expansion plans.

Asked by Saurabh Handa

5G Rollout and Uptake Direct
In all the 4 cities, I mean, 2 circles and 2 cities, where we have launched 5G, the uptake has been very good. Traffic has quickly started moving to 5G, wherever people have 5G devices. One thing I have been very happy about is that Mumbai, Delhi and also Chandigarh and Patna post the launch, we've not had any complaints with reference to 5G, really speaking.

Provides positive early feedback on 5G adoption and network performance, validating the initial investment in 5G infrastructure.

Asked by Sanjesh Jain

FY26 Capex and Site Target Direct
Our unique towers are already at 1,95,000. And of course, some of these are getting converted from not being broadband to broadband. So when we say a figure of about 220,000, that is a figure of the total number of sites. Of course, in the end result, everything will be a 4G site. So there will be no difference between the unique sites and the 4G broadband sites. Currently, there is some gap there. So ultimately, our target is to get to about 220,000 sites. In terms of that being dependent on bank funding, as I said, with our current capex in progress, we should get to 84% population coverage.

Clarifies the ambitious site target of 220,000 and its dependency on securing bank funding, which is a key factor for future network expansion.

Asked by Sanjesh Jain

Government Shareholding and Board Seat Direct
I don't think there is any intent to take up any board seat. Let me just describe it like this, that this is shareholding of the government not with an intent to have the shareholding, but this shareholding is a consequence of their trying to provide support in reducing our dues. Their intent is not to have this holding and the intent is not to have any board seat.

Addresses concerns about potential government interference in company operations despite its 49% shareholding, reassuring investors about operational control.

Asked by Vivekanand Subbaraman

Settlement Asset Postponement Direct
So, the settlement asset is not receivable unless we ourselves pay the AGR dues. Having said that, we are in discussion with Vodafone Group to see what is the best way to make this arrangement workable. While we are under discussion, we have extended the date from June to September so that there is no strict deadline and we can continue with our discussions.

Explains the delay in receiving a significant financial asset from Vodafone Group, linking it to AGR dues and ongoing negotiations, which impacts the company's liquidity.

Asked by Vivekanand Subbaraman

Network Opex Management Direct
Some of these, I can qualitatively tell you is that negotiation of rentals has been done over the year where they were very high. Biggest saving is coming from energy cost optimization. A lot of initiatives have been taken that we can operate on a lesser energy cost. Of course, just to be clear, if you look at on a year-on-year basis, it is comparable. But on a quarter-on-quarter basis, Q4 is the best energy cost quarter. So quarter-on-quarter comparison. But year-on-year also, we've had significant savings in energy cost.

Details the specific cost management initiatives undertaken to keep network operating expenses in check despite network expansion, indicating operational efficiency efforts.

Asked by Gaurav Malhotra

3 min read 7 chapters

Detailed narrative

Q4 FY25 Financial Performance Overview

Vodafone Idea reported Q4 FY25 revenue of ₹11,010 crores, marking a 3.8% year-on-year growth and representing the highest daily average revenue in the last five years. EBITDA excluding IndAS116 stood at ₹2,320 crores for the quarter. For the full FY25, the company reported a PAT loss of ₹27,380 crores, which was lower by ₹3,850 crores compared to FY24. The company's cash and bank balance as of March 31, 2025, was ₹9,930 crores, while bank debt reduced from ₹4,040 crores in March 2024 to ₹2,330 crores.

Strategic Fund Raising and Financial Strengthening

During FY25, Vodafone Idea successfully raised approximately ₹614 billion in equity. This included a ₹180 billion FPO, ₹40 billion from promoters, ₹25 billion from vendors Nokia and Ericsson, and ₹369 billion through the conversion of government dues into equity. This significant capital infusion, coupled with credit rating upgrades, has strengthened the company's financial position and is facilitating ongoing discussions for debt funding.

Network Expansion and 5G Rollout Momentum

The company invested ₹4,280 crores in Q4 FY25, its highest quarterly capex since the merger, bringing the total FY25 capex to ₹9,620 crores. This investment expanded 4G population coverage by 73 million, reaching ~83%, and grew 4G data capacity by ~31%. Vodafone Idea also initiated 5G rollout in March 2025, with services now live in Mumbai, Delhi, Chandigarh, and Patna, targeting all 17 circles with 5G spectrum by August 2025. The company aims to increase its total site count to 220,000.

Market Initiatives and Subscriber Trends

Vodafone Idea's 4G subscriber base increased from 126 million to 126.4 million during the quarter, with data traffic growing by 5.2%. The company launched new postpaid plans like Easy+ for corporate users and Vi Max Limitless Postpaid Data Plans offering unlimited high-speed data in nine markets. On the prepaid front, new plans like Super Hero and Non-Stop Hero were introduced, offering unlimited data benefits. These initiatives, along with network improvements, have led to a significant reduction in subscriber loss.

Engagement with DoT and Regulatory Landscape

The Department of Telecommunication (DoT) extended support by waiving the Bank Guarantee requirement for spectrum auctions prior to the 2021 reform package. The conversion of ₹369.5 billion of spectrum auction dues into equity increased the government's shareholding to 49%, with promoters retaining operational control. Management clarified that the government has no intent to take a board seat, viewing its shareholding as a support measure rather than an operational role.

Cost Management and Operational Efficiency

Despite increased capex and network expansion, the company has maintained relatively flat network operating expenses over the last few quarters. This was achieved through various initiatives, including successful negotiations of rentals, energy cost optimization, insourcing of fiber management, and revisiting legacy IT contracts. These efforts have not only reduced costs but also improved operational metrics, such as a 75% reduction in P1 incidents for fiber management.

Industry Outlook and Tariff Structure

Management highlighted that India's ARPU remains among the lowest globally, and the telecom industry's Return on Capital Employed (ROCE) is below its cost of capital. They emphasized the necessity of further tariff increases and a shift towards a usage-linked pricing model, where heavy data users contribute proportionally more. This structural change is seen as essential for ensuring a fair return on significant investments and supporting future capital expenditure in the sector.

This is an AI-generated summary of a publicly available earnings call transcript.
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